The Singapore 380 CST high sulfur fuel oil cash differential fell to a seven-week low this week as supply tightness starts to ease, S&P Global Platts data showed.
The cash differential fell to $5.17/mt Tuesday, the lowest since July 13 when it was $4.81/mt, and was assessed at the same level Thursday, down 2 cents/mt day on day, the data showed. The 380 CST HSFO marker was assessed at $451.82/mt Thursday, up $8.29/mt on the day.
Fuel oil traders attributed the fall in the cash differential to expectations of rising supply. Singapore is expected to receive more than 4 million mt of arbitrage cargoes from the Europe and the US in September, up from 3.5 million-4 million mt/month in July and August, trade sources said.
Singapore typically receives about 5 million mt/month of fuel oil from Europe and the US, but the volume has been lower since June as Middle Eastern countries such as Saudi Arabia imported more cargoes from Europe to meet peak electricity demand in summer.
As summer draws to a close, Saudi Arabia was buying less, traders said.
In addition, Singapore’s residue inventories rebounded this week. Singapore’s commercial stockpile of residues jumped to 16.661 million barrels in the week ended August 29, the highest since July 18, and up 17.1% from a week earlier, IE Singapore data released late Thursday showed.
IE Singapore describes total stocks of heavy distillates as residues, which include cracked, straight-run fuel oil and low sulfur waxy residue.